IDEAS home Printed from https://ideas.repec.org/p/isu/genstf/197907010700001067.html
   My bibliography  Save this paper

Stability, Random Disturbances, and the Exchange Rate Regime

Author

Listed:
  • Enders, Walter
  • Lapan, Harvey E.

Abstract

Economists have long debated the relative merits of fixed versus flexible exchange rate systems. One of the major issues in this debate concerns the ability of the exchange rate system to isolate a nation from external disturbances: see for example, papers by Mundell (1960), Stern (1963), Tower and Courtney (1974), and Enders (1977), Fischer , (1977) added another dimension to the controversy by examining the relative stability of real consumption and prices, assuming that the economy is subject to stochastic disturbances. His principle conclusion for the small open economy is that if disturbances are . external, then a flexible exchange rate regime is better in that foreign disturbances have no impact on the domestic economy.

Suggested Citation

  • Enders, Walter & Lapan, Harvey E., 1979. "Stability, Random Disturbances, and the Exchange Rate Regime," ISU General Staff Papers 197907010700001067, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:197907010700001067
    as

    Download full text from publisher

    File URL: https://dr.lib.iastate.edu/server/api/core/bitstreams/00c7423b-d1e0-4634-8728-a245b2758ad3/content
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Robert A. Mundell, 1960. "The Monetary Dynamics of International Adjustment under Fixed and Flexible Exchange Rates," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 74(2), pages 227-257.
    2. Dornbusch, Rudiger, 1973. "Devaluation, Money, and Nontraded Goods," American Economic Review, American Economic Association, vol. 63(5), pages 871-880, December.
    3. Enders, Walter, 1977. "Portfolio Balance and Exchange Rate Stability: A Note," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 9(3), pages 491-499, August.
    4. Tower, Edward & Courtney, Mark M, 1974. "Exchange Rate Flexibility and Macro-Economic Stability," The Review of Economics and Statistics, MIT Press, vol. 56(2), pages 215-224, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Feltenstein, Andrew & Lebow, David & Sibert, Anne, 1988. "An analysis of the welfare implications of alternative exchange rate regimes: An intertemporal model with an application," Journal of Policy Modeling, Elsevier, vol. 10(4), pages 611-629.
    2. Frenkel, Jacob A. & Aizenman, Joshua, 1982. "Aspects of the optimal management of exchange rates," Journal of International Economics, Elsevier, vol. 13(3-4), pages 231-256, November.
    3. Kim, Jin-Ock, 1990. "A time series analysis of the real exchange rate movement in Korea," ISU General Staff Papers 1990010108000010378, Iowa State University, Department of Economics.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Martin Feldstein, 1991. "Domestic Saving and International Capital Movements in the Long Run and the Short Run," NBER Chapters, in: International Volatility and Economic Growth: The First Ten Years of The International Seminar on Macroeconomics, pages 331-353, National Bureau of Economic Research, Inc.
    2. repec:phd:pjdevt:jpd_1990_vol__xvii_no__2-d is not listed on IDEAS
    3. António Afonso & José Alves & José Carlos Coelho & Jamel Saadaoui, 2025. "Fiscal and External Sustainability: A Two-Step Time-Varying Granger Causality Assessment," CESifo Working Paper Series 11694, CESifo.
    4. George H. Borts & James A. Hanson, 1979. "The Monetary Approach to the Balance of Payments with an Empirical Application to the Case of Panama," NBER Chapters, in: Short-Term Macroeconomic Policy in Latin America, pages 257-288, National Bureau of Economic Research, Inc.
    5. Martin, Will, 2021. "Tools for measuring the full impacts of agricultural interventions," IFPRI-MCC technical papers 2, International Food Policy Research Institute (IFPRI).
    6. Oriola, Hugo, 2023. "Political monetary cycles: An empirical study," European Journal of Political Economy, Elsevier, vol. 79(C).
    7. Jeffrey A. Frankel & Shang-Jin Wei, 2004. "Managing Macroeconomic Crises," NBER Working Papers 10907, National Bureau of Economic Research, Inc.
    8. Mendoza, Enrique G., 2000. "On the Benefits of Dollarization when Stabilization Policy Is Not Credible and Financial Markets are Imperfect," Working Papers 00-01, Duke University, Department of Economics.
    9. Frenkel, Jacob A. & Mussa, Michael L., 1985. "Asset markets, exchange rates and the balance of payments," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 2, chapter 14, pages 679-747, Elsevier.
    10. Engel, Charles, 2001. "Optimal Exchange Rate Policy: The Influence of Price Setting and Asset Markets," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(2), pages 518-541, May.
    11. Guillermo J. Vuletin, 2004. "Exchange Rate Regimes And Fiscal Performance. Do Fixed Exchange Rate Regimes Generate More Discipline Than Flexible Ones?," Econometric Society 2004 North American Winter Meetings 474, Econometric Society.
    12. Mr. James M. Boughton, 2002. "On the Origins of the Fleming-Mundell Model," IMF Working Papers 2002/107, International Monetary Fund.
    13. Peijie Wang, 2010. "Assessment on Valuation of RMB – a triangular analysis approach," Working Papers 2010-FIN-02, IESEG School of Management.
    14. Olusegun Akanbi, 2015. "Fiscal policy and current account in an oil-rich economy: the case of Nigeria," Empirical Economics, Springer, vol. 48(4), pages 1563-1585, June.
    15. Michael R. Darby & James R. Lothian, 1981. "Exchange Rate Systems and Trends in Inflation," UCLA Economics Working Papers 226, UCLA Department of Economics.
    16. Hernán Rincón, 1999. "Testing the Short-Long-Run Exchange Rate Effects on Trade Balance: The Case of Colombia," Borradores de Economia 120, Banco de la Republica de Colombia.
    17. Jonida Bollano & Delina Ibrahimaj, 2015. "Current Account Determinats in Central Eastern European Countries," IHEID Working Papers 22-2015, Economics Section, The Graduate Institute of International Studies.
    18. Kevin Gallagher, 2012. "The Myth of Financial Protectionism: The New (and old) Economics of Capital Controls," Working Papers wp278, Political Economy Research Institute, University of Massachusetts at Amherst.
    19. Alberto Giovannini, 1991. "The Currency Reform as the Last Stage of Economic and Monetary Union: Some Policy Questions," NBER Working Papers 3917, National Bureau of Economic Research, Inc.
    20. David Laborde & Abdullah Mamun & Will Martin & Valeria Pineiro & Rob Vos, 2020. "Modeling the Impacts of Agricultural Support Policies on Emissions from Agriculture," World Bank Publications - Reports 34453, The World Bank Group.
    21. B. Gabriela Mundaca & Jon Strand, 2005. "A risk allocation approach to optimal exchange rate policy," Oxford Economic Papers, Oxford University Press, vol. 57(3), pages 398-421, July.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:isu:genstf:197907010700001067. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Curtis Balmer (email available below). General contact details of provider: https://edirc.repec.org/data/deiasus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.